US opened probe on payments for Ill. jobs program

Illinois' top transportation official said Monday she approved more than $3 million in questionable payments for a 2008 summer jobs program, which caught the interest of federal investigators, because arm-twisting from then-Gov. Rod Blagojevich's office made her fear for her job.

Transportation Secretary Ann Schneider was the Department of Transportation's finance director when Blagojevich's office was pushing for rapid payment of $3.1 million to five nonprofits participating in the program.

Schneider said she ensured there would be follow-up scrutiny but approved the checks from the state's highway construction fund despite evidence that participants were doing ineligible tasks unrelated to transportation, such as rearranging furniture, conducting community surveys and working at golf courses.

"We were trying to slow it down to make sure there were commonplace safeguards in place, but there was a great deal of pressure to get this done in a very short timeframe," Schneider said in an interview.

A report released Monday by the state's Executive Inspector General said the agency should seek reimbursement of nearly $644,000 it overpaid the nonprofits to hire teenagers under the program launched by Blagojevich. The impeached governor, who was convicted on unrelated corruption charges, began serving a prison sentence last month.

When the inspector general referred the matter in 2010 to the state attorney general, officials indicated it was part of a federal investigation, according to the report, which didn't say who began the probe. U.S. attorney's offices in Chicago and Springfield declined comment.

The report did not recommend any employees be disciplined but said an internal IDOT audit _ which Schneider said she ordered _ turned up the overpayments.

The $7.8 million program was part of Blagojevich's response to a rash of Chicago shootings in early 2008. His Department of Human Services was in charge, and IDOT's road fund was targeted as the checking account.

Monday's report redacted names that surfaced during the investigation. But job titles remained, identifying Schneider and general counsel Ellen Schanzle-Haskins. It's unclear whether other employees involved remain on staff. Schneider said the agency will "go forward" without penalizing anyone.

Asked Monday why she didn't object to paying money without proper documentation, Schneider said: "That's a good question." But she said she and agency lawyers believed the payments were defensible given the agency allowed itself subsequent examination of the records.

She and Schanzle-Haskins both told investigators that they believed resistance would get them fired, according to the report.

A spokeswoman for Gov. Pat Quinn, Brooke Anderson, said senior IDOT managers have been "counseled on monitoring procedures and how to ensure this never happens again." She said the administration implemented other recommended changes. However, those recommendations weren't made public in the report.

Auditors who settled on repayment of $644,000 _ mostly unpaid payroll taxes _ said much more money was likely misspent but pursuing it would mean long legal battles over individual timesheets.

The reimbursement amounts to about 8 percent of the $7.8 million total, which investigators termed "as problematic as it was ambitious." Schneider said the agency has recovered $170,000 from one organization but four others are contesting the issue.

The program reportedly employed 3,500 teens and young adults for eight weeks. The Department of Human Services denied an Associated Press public-records request last year for names of the participants.

IDOT officials approved the plan as long as road-fund money was used on transportation-related projects. But agreements weren't signed with the nonprofits, which did the hiring, until well after the project was under way and IDOT didn't monitor it.

The first half of the money was paid in August 2008. Timesheets necessary for the second payment in September were missing, vague or incomplete, or clearly showed ineligible work such as "conflict resolution class" and "event planning."

Schneider told investigators she was "not necessarily happy" about arranging to use road money for the project. She said given the circumstances she did what she could to ensure accountability.